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General Elections of 2019

Reference

The General Elections of 2019 are not too far and in view of this, two major political parties in the country are sitting in the garb of public-lucid promises. One of these is the minimum monthly income (Universal Basic Income-UBI), which means that on behalf of the government, every citizen of the country should give a fixed monthly income. There is a talk of implementing it in all the poor families in India. Of course, the government did not mention it in the interim budget, yet this issue remained in discussion continuously.

Sikkim is preparing to implement UBI

Sikkim Government has proposed to implement UBI in the state. If the Sikkim government succeeds in doing so, then it will be the first state in the country to do so.

Even before independence try

In 1938, there was a plan to guarantee income in the country. Even in 1964, the government wanted to take it out of the cold, but it did not matter. In 2011-12, it was implemented in a small village at Madhya Pradesh. This was then mentioned in the Economic Survey of 2017-18.

What is UBI?

Professor Guy Standing of the University of London , presented the idea of ​​giving a fixed amount to the poor and the poor at a fixed interval for eliminating poverty. Under their consideration, no person should be required to provide proof of their weak socio-economic status or unemployment to take advantage of this scheme. In such a case, it can say that UBI is the unconditional cash transfer to every citizen of the country on a fixed interval.

What is pro Standing Theory?

Pro. According to the standings, implementation of UBI in India will cost GDP of 3 to 4 percent, while 4 to 5 percent of GDP is currently being spent in government subsidy. In the financial survey 2016-17, the three suggestions given for implementing the scheme were the first suggestion to give benefit to the poorest 75 percent of the population. It said that 4.9 percent of GDP would be spent on this.

Pro. According to the standings, both UBI and subsidies can not go together. Government’s fiscal discipline should not be affected, for this, the government can remove subsidies in a phased manner and the subsidy can be completely eradicated. Instead, the fixed amount will go straight to people’s account.

Two main features of the UBI concept

It is universal in its nature, not targeted (targeted). This is an unconditional cash transfer, for which there is no need to prove any identity.

UBI is guaranteed a minimum basic income which will be given by the government every month without any but-but-every citizen For this, it is important for a person to be a citizen of that country, where it is to be implemented.

Was mentioned in the 2016-17 Economic Survey

UBI was mentioned in the 2016-17 Economic Survey. It was said in the survey that there are 950 schemes sponsored by the Central Government in India and their share of GDP budget is approximately 5%. Most of these schemes are small in terms of allocation and the total budget allocation of top 11 schemes is 50%. Keeping this in view, UBI has been proposed to present the scheme as an alternative to beneficiaries of existing schemes. According to the survey, ‘UBI can improve not only the quality of life but also the administrative level of existing schemes, if it is prepared in this way.’

Then in the Economic Survey a draft of 40 pages was prepared for UBI. It was said in the draft that UBI could be a possible solution to the poverty prevailing in India. Since welfare schemes are not able to meet the expectations, this was also referred to as a meaningful step. During that time, Chief Economic Advisor Arvind Subramanian had said, “A scheme like UBI can be helpful in getting a social justice with a strong economy.”

According to this economic survey, the proposal for giving annual budget of 7,620 rupees to the poorest 25 percent of the household was proposed. But it was not implemented in view of the difficulties coming in its cost and many types of subsidies being withdrawn. Then it was estimated to cost about 7 lakh crore rupees on the treasury.

Poverty assessment in the country

Who has come to the extent of poverty line in the country, its estimation has not been properly done. In the Tendulkar formula formula, 22 percent of the population was said to be ‘poor’, while Rangarajan formula considered 29.5 percent of the population below the poverty line. Despite this, the government can take financially and socially vulnerable groups a certain amount of money. According to an estimate, under the UBI scheme, around 200 million people in the country will benefit first.

During the World Economic Forum (WEF) 2018 conference in Davos, Switzerland, UBI was discussed in several sessions.

Successful Pilot Project in Madhya Pradesh

Universal Basic Income was started as a pilot project in a Panchayat of Madhya Pradesh, which had good results. 6000 people of 8 villages of Indore were brought from this scheme between 2010 and 2016. In this, Rs 500 was given to men and women and Rs 150 was given to children every month. After getting the benefits of the scheme in 5 years, most of these people accepted the increase in their income.

Potential Challenges in UBI’s Way

The biggest question is whether the economy of this country, like India, is second in the world in developing and population, is capable of carrying this burden and what are the challenges in implementing it?

The biggest dispute over this is that what kind of benefits should be met in the country of inequalities and diversity?

Well, most people associated with this plan believe that the UBI scheme can succeed only when its benefits are available to everyone. Pro. Standing also believe that this plan will succeed only when every citizen gets a minimum income every month and there should be no distinction between the rich and the poor. If this is done then this plan will not remain universal in its original form. This will increase corruption and there will be a possibility of other disputes emerging.

But the Economic Survey 2016-17 clearly states that the entire population of the country can not be brought under UBI’s scope, hence it is the biggest challenge to identify its real beneficiaries.

If UBI is started by assessing one of the three suggestions given in the survey, then there will be a possibility of getting out of the actual entitlement plan, as with every welfare scheme.

Now almost everyone has their specific base number in the country, a fixed amount can be reached every month in the bank account linked to that number, such as in the case of LPG subsidy is being done now.

What is going to be noticed here is that the foundation basically establishes every person’s identity, but it does not classify people. In such a situation, it would be OK to proceed with UBI without identifying the beneficiary better.

The most complex question is what will be the ‘value’ of UBI? If it is a poverty line, then Rs. 3200 / – in rural areas and Rs. 40 in urban areas, approximately Rs. 1200 per month and Rs. 19,400 rupees per annum. Can a person fulfill his needs?

UBI ends after applying subsidy system

There is no double opinion that UBI’s idea could be an important effort towards elevating the standard of life of the people of India with the improvement of health, education and other civil facilities, but it is not possible Till now the subsidies being given through all the schemes are not phased out in a phased manner. It must be kept in mind that the subsidy system is terminated as soon as the UBI scheme is started. For this, social welfare schemes have to be stopped or cut. With the approval of private investment in the public sector, there may be a need to mobilize resources by imposing extra taxes.

Have been done abroad too

It is not that UBI is just being discussed in India, but it is also being used to apply it abroad.

It is considered partially to apply to Stockton in the state of California in the US . 100 people here will be given 500 dollars a month for one and a half years.

In January 2017, Finland had provided UBI for 2000 to 25 years of age, but it stopped after two years. All these people were given 560 Euro per month.

UBI’s biggest ever experiment has begun in the African country of Kenya . The American charity institution GiveDirectly officially started trial of rural Kenya UBI. This is being used on all residents of Kenya’s nearly 120 villages. There are more than 16 thousand people in total, who are giving some cash transfer during the term without the use. Some of these villages have to be provided UBI facility for 12 years.

Experimental UBI facilities are being provided in some areas of Brazil . In 2004, there was a Bolsa Familia Program , which started to give families a certain amount including children. By 2013, every family was given assistance of around 30 dollars per month, which was 4.4 percent of the minimum wages. When its findings were noticed, it was discovered that this helped Brazil reduce the level of malnutrition.

Iran also launched a scheme like UBI in 2011, which aims to end subsidy on gas and petroleum. At first, the scheme saw an increase in fuel prices, but after some time the situation became normal. Under this, each family was given approximately 40 dollars per month.

Between 2005 and 2009, the Mexican government introduced a policy called Programa de Apoyo , under which each family was given 10 percent of the minimum wage rate or equivalent foodgrains. But it was canceled due to the careless negligence done in its implementation.

Under a pilot project, two villages in the underdeveloped African country, Namibia , were also granted facility of UBI for a period of one year between 2008-09. This scheme funded by the German Protestant Church decreased the food problem of those villages during this time period.

Switzerland also made a referendum on last year, but the public dismissed it because of the fear of UBI’s financial impact and the motivation to work for the people in its due.

Policy Commission’s stance on UBI

In the year 2017, the then Deputy Chairman of the Commission, Arvind Pangariya, said …

The country does not have the necessary financial resources for the UBI scheme. Relative to the current level of income and investment in health, education, infrastructure and defense sector, the country does not have adequate resources for the proper UBI for 130 crore Indians. Considering the 2011-12 as the Aadhar year, in view of the Tendulkar Committee report submitted on the poverty line, huge amount will be needed to implement this scheme. Based on the report of the Tendulkar Committee on base year 2011-12, the urban poverty line is Rs 1000 per person monthly. Considering inflation and current prices during 2011-12, this figure will be quite large, this figure will be quite big. But the total cost of transferring 1000 rupees per month to every Indian will be 15.6 lakh crores (1000×12 months x130 crores population) per annum … and the country has no such financial resources in such quantity.

As far as India is concerned, will UBI be able to replace other welfare s schemes? If yes, how can UBI be able to balance inflation due to lack of government support and increase in demand? It has been observed that in countries where such efforts have also been used, the countries which have experimented with the income plan have either been affected by socialism or there is a deep impact on welfare politics.